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CIC chief calls bank's online bidding process 'disgraceful'

4 April, 2002 | By David Taylor

RIAS secretary Sebastian Tombs has met with Construction Industry Council chief executive Graham Watts to discuss the 'thin end of the wedge' problem he fears over the Royal Bank of Scotland's new online bidding process (AJ 28.3.02). And Watts has declared the bank's behaviour 'absolutely disgraceful', with the potential to put client relationships back '10 years at least'.

Last week the AJ revealed how RBS, the seventh largest company in the UK and one which boasts a property portfolio worth more than £2 billion, has begun a new system by which it picks architects for work using what it calls a 'reverse auction' system.

This is when architects will take part in typically half-hour auctions where they can often see the value - though not the identities of the practices - of cheapest bids on screen and can then adapt their own in real time in a race to win the work.

Tombs met Watts last Friday to discuss the dangers of the system if they are applied more widely in the construction industry.

Watts told the AJ: 'It's absolutely disgraceful, no question about that. Obviously RBS are entitled to buy services as they want but customers will expect more. They obviously haven't heard of the clients' charter.'

Watts aims to contact the Confederation of Construction Clients to persuade it to condemn the new system, and will then deal with the Association of Consulting Engineers and the RIBA in a bid to send out a similar message.

Meanwhile, Tombs has written to RBS group chief executive Fred Goodwin to take issue with the bank's use of the method. Tombs wrote not just as a representative of the RIAS considering RBS' Scottish component to the story, but on behalf of the RIBA, whose codes of conduct he feels may be violated in the new arrangement.

'I think the RIBA should be taking up the issue, ' Tombs told the AJ. 'It encourages a process where members are almost obliged to bid in a Dutch auction. We don't think that's a good way of doing business as it appears to put the emphasis on price above quality. It runs against the whole quality agenda and if it encourages people to revise prices it also goes against codes.'

The RIBA's Principle 3.3 in its Code of Conduct says: 'A member undertakes when offering services as an independent consulting architect not to revise a fee quotation to take account of the fee quoted by another architect for the same service.'

But RBS has told Tombs that it was up to members to only bid once so they do not break that code.

Tombs concedes that there are some jobs where the process may be applicable - if there is little 'intellectual content' such as standard, rolled out fit-outs. But he felt it necessary to raise it as a 'classic' issue with Watts.

'We can see this being the thin end of the wedge and surveyors and project managers trimming off all this wasteful stuff that architects still insist on charging so much for!'

said Tombs. 'There's a real risk you can see the process providing the absolute rock-bottom price, against everything that Latham and Egan stand for.'

Tombs added that he was concerned that people would seize on the system as a new approach to 21st century IT 'when perhaps it has a great potential downside that could be quite significant'. And he is anxious that the system may be open to abuse by other companies taking up the technology, including 'stooge' practices offering bogus bids to force others down.

RBS uses the FreeMarkets software system to run the auctions, and has also used the process to buy in laptops, mobiles and computer stationery.

But it used it for architectural jobs including a national contract for the first time last week, and Tombs is worried that architecture as a service is being treated in the same way as products.

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